Teamsters-UPS Have Tenuous Agreement in Place: What it Means for Retailers

As most of the industry is aware, the most recent five-year UPS/Teamsters National Labor Agreement expired in July. However, the parties extended and have been operating under the same agreement as they negotiated a settlement. In July, UPS and the Teamsters announced they had reached a tentative “handshake” deal for both Freight (LTL) as well as Small Package. The tentative deal required union members to vote to approve and ratify the new five-year deal.

On Oct. 5, the Teamsters members voted on two different agreements: one for UPS Freight and another for UPS Small Package. The Freight agreement was voted down, meaning Union members didn't ratify the agreement. So it’s back to the negotiating table on the UPS Freight contract despite the tentative agreement reached in July. There's a risk of strike if additional negotiations don't lead to an agreement.

The Freight vote had strong turnout amongst the approximately 12,000 Teamster Freight employees that were eligible to vote.

By contrast, the Small Package contract did not have strong voter turnout amongst a much larger labor pool of approximately 210,000 employees. Amongst those that voted, the Small Package agreement was also rejected by Union workers (54 percent to 46 percent), again, despite the handshake deal reached this summer. However, the Teamsters constitution requires two-thirds of voters to reject a contract if less than 50 percent of union members voted. Only 44 percent of members voted, so the tentative deal was ratified.

What Are the Ramifications for Retailers?

Should retailers be concerned about a possible strike as volume ramps up at the most critical, high-volume shipping season? According to UPS, it’s business as usual and the company expects no disruption to its operation.

However, many union members are up in arms over the result of the Small Package deal. They voted the tentative agreement down, and yet it’s been ratified. Just like voters dissented in 2016 when Hillary Clinton won the popular vote but Donald Trump was elected president, so too are many union members crying foul.

As a result, UPS will go back to the negotiating table with Teamsters leadership in good faith to negotiate additional concessions to head off an insurrection. However, that doesn't guarantee that there won’t be a disruption. After all, UPS negotiated over a billion dollars in concessions with union leaders to reach its tentative agreement. By the union’s own rules, the agreement became ratified due to lower voter turnout. UPS is in under no obligation to sweeten the deal.

The World Socialist Web Site (WSWS) and the Socialist Equality Party declared their support for dissenting Teamsters on their websites. “The issues facing UPS workers are universal. The vote against the UPS contract — which coincided with the rejection of Teamsters-backed agreements by UPS Freight workers and mechanics at the UPS air cargo fleet in Louisville, Kentucky — is part of the growth of working class opposition across the United States and internationally. The naked fact is that the rank and file voted down the contract, and the Teamsters union is despotically ignoring their vote and imposing it anyway.”

The two groups are urging UPS union workers to form rank-and-file committees at every UPS location, and calling for workers to declare the ratified contract illegitimate and null and void. The goal is to build support for a strike and to shut down UPS until workers’ demands are met. Those demands include: 1.) scrapping a driver classification called “hybrid drivers” who will work weekends and holidays at part-time salaries; 2.) turning part-time workers who so desire into full-time workers with full pay and benefits; and 3.) securing a substantial wage increase.

While it’s doubtful the latest news will result in a walk-off that disrupts UPS operations as it heads into its peak volume season, it’s certainly a distraction.

UPS will have to contend with angry and uncertain union members, including the core of its operation — truck and package delivery drivers, as well as hub operators. UPS could lose volume from nervous customers, and it will certainly need to respond to thousands of its customers that want guarantees there won’t be delivery delays or a total shutdown.

UPS retail and other customers are wise to demand prompt resolution from the company, and to explore alternative delivery providers until they’ve obtained strong assurances from the world’s largest package delivery company.

Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.